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 Kozi Checks & Balances TaxTactics News 
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November 02.2025
2 Minutes Read

How AI and Buy Now, Pay Later are Changing Holiday Shopping for Merchants

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Revolutionizing Holiday Shopping: AI and BNPL in Focus

As the holiday season draws near, small business owners are presented with evolving dynamics that could shape their sales strategies. According to PayPal's 2025 Holiday Shopping Survey, a significant 40% of American consumers have turned to artificial intelligence (AI) for shopping support over the past year, with an overwhelming 77% planning to do so again this holiday season. This shift is not merely about technology; it's about understanding consumer behaviors that may dictate successful sales tactics.

The Power of Flexibility: Why BNPL is Essential

Flexible payment solutions like Buy Now, Pay Later (BNPL) are no longer just a trendy option. They have become an integral expectation among shoppers. In fact, 50% of surveyed consumers expressed intentions to utilize BNPL during holiday shopping, primarily for its affordability and enhanced budget control.

Michelle Gill, General Manager of Small Business and Financial Services at PayPal, suggests that when consumers know they can spread their payments over time, they are significantly more likely to complete their purchases. PayPal’s insights reveal that businesses have seen increases in average order value—91% for large enterprises and 62% for small firms—when offering BNPL options.

AI: The New Shopping Companion

AI is changing how consumers interact with products and brands. The survey indicates that 34% of respondents plan to leverage AI tools to find the best deals, while 30% will use AI for product comparisons. For small business owners, optimizing their visibility on AI platforms is crucial for capturing the attention of consumers seeking convenience and efficiency.

Multichannel Strategy: Bridging Online and Offline Experiences

The current trend of omnichannel retailing is significant, with 64% of shoppers indicating they will frequent physical stores this holiday season. Adapting to a seamless shopping experience across both online and in-store platforms can enhance customer loyalty. In fact, the survey shows that 74% of consumers are more likely to shop with merchants who offer rewards and cash back, making incentive programs more than just a bonus—they're pivotal in retaining customers.

Key Considerations for Small Businesses

While the integration of AI and BNPL could seem tempting, small business owners need to be aware of practical challenges associated with these technologies. Implementing AI requires time and resources aimed at optimizing product listings to engage effectively with intelligent algorithms. Moreover, adopting BNPL could demand partnerships with financial services, which may pose hurdles for smaller companies operating on tight budgets.

Strategize for the Future: A Call to Action

As we approach the holiday rush, it’s imperative for small business owners to not only adapt their strategies but also to look beyond immediate gains. By capitalizing on AI and BNPL, while considering the importance of a unified retail experience, businesses can build lasting relationships with their customers and position themselves for sustained growth far beyond the holiday season.

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